Here’s your update on the real estate market for the month of September.
For today’s market update, let’s first take a look at the national changes we’ve noticed with respect to showing traffic. When COVID-19 first hit, pretty much everything slammed on the brakes. However, since that shock in spring, we’ve seen an increase in showing traffic, which tells us that houses are still being shown and are still going under contract despite the pandemic.
Next, the data shows us that from mid-March to late May, purchase applications slowed down year over year. After that period, they began to surge again. Since interest rates are so low, people in the market are still looking to buy homes—now is a killer time to do it.
The number of newly pended deals spiked by up to almost 17% year over year. Part of that is due to the lack of home sales for the six weeks that they dipped, but the numbers don’t lie—houses are moving.
Let’s take a look at the projections for future home prices; many of those who thought there would be a lot of foreclosures and short sales in the future were not totally wrong, but rather just off by potentially 12, 24, or even 36 months. Here’s how the major institutions project home prices to increase:
- Fannie Mae: 4.4%
- National Association of Realtors: 4.3%
- MBA: 4%
- Zillow: 3.6%
- Zelman: 3%
- Reuters’ Poll: 3%
- Freddie Mac: 2.3%
- CoreLogic: 0.6%
- Haus: -1.1%
I personally predict they’ll rise by 4% or possibly even 5% over the next year. That’s good if you’re thinking about selling your house, but on the flip side, if those rates continue to increase at that frequency, what’s going to happen in 36 months? When interest rates start to come back down, prices will at least level off, or maybe dip down just a little bit.
If you’re buying a house, you need to hire an agent who knows the market, is able to get you the best possible price, terms, and conditions on the property, and can help you get the cheapest money possible so that you can be secure in the short and long term if you purchase within the next 12 to 24 months.
I also have some good news regarding forbearance: The number of mortgages in active forbearance is leveling off. That means that people are starting to pay their mortgages again. The banks were sweating bullets earlier in the year, but now people are getting back in the game.
Finally, let’s look at the percentage of distressed property sales going back to 2012. Back then, around one out of every three properties sold was a distressed property. Over time, that percentage dropped drastically. This year, foreclosures and short sales represented less than 1% of sales in July. That could rise to 1.5% or 2% over the next 12 months, but that’s still drastically low compared to 2012.
If you have any questions about the market or are looking to buy or sell real estate, don’t hesitate to reach out to us. We’d love to hear from you.